HELP, Inc. uses a job-order costing system. The company applies manufacturing ov

Question

HELP, Inc. uses a job-order costing system. The company applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labor-hours. Last year, manufacturing overhead and direct labor-hours were estimated at $80,000 and 16,000 hours respectively, for the year. In June, Job #89 was completed. Materials costs on the job totaled $1,500 and labor costs totaled $2,400 at $6 per hour. At the end of the year, it was determined that the company worked 15,000 direct labor-hours for the year, and incurred $78,000 in actual manufacturing overhead costs. Required: a. Determine the predetermined overhead rate for the year. b. Determine the amount of overhead charged to jobs during the year. c. Determine the amount of under applied or over applied overhead for the year. d. Assuming that job #89 contained 100 units, determine the unit cost that would appear on the job cost sheet for Job #89.

Explanation / Answer

a) predetermined overhead rate for the year = 15000*5 = 75000 b) 78000 c) underapplied by 78000-75000 =3000 d) total cost of job 89 = 1500+1400 +400*5 = 4900 unit cost = 4900/100 =4.9/unit

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